Los Angeles (June 8, 2004) -- The Securities and Exchange Commission is conducting an informal inquiry into possible independence issues at executive recruiting firm Korn/Ferry International, the company disclosed this week.
In a filing with the SEC, Korn/Ferry revealed that it was advised in late May that the SEC is conducting an informal inquiry into certain independence issues arising out of payments made by its independent auditor, Ernst & Young LLP, to a company affiliated with former Korn/Ferry director Mark C. Thompson, for products and services provided by that company to E&Y.
According to the filing, the company affiliated with Thompson entered into a contract with E&Y in December 2002 and the audit firm paid it a total of $377,500, plus reimbursement of expenses from December 2002 to April 2004.
The filing noted that Thompson's term as a director ended in September 2003.
Korn/Ferry said E&Y conducted an internal review concerning the payments and whether they impaired the firm's independence as its outside auditor and delivered the company's audit committee a written confirmation of its independence and its belief that the payments made to the company affiliated with Thompson didn't impair its independence.
"Based on this written confirmation from E&Y, and based upon the company's current knowledge of the facts and circumstances, the company believes that E&Y's independence was not impaired as a result of its payments to the company affiliated with Mr. Thompson," the SEC filing said.
Korn/Ferry said that it is cooperating with SEC.
-- WebCPA staff
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